First house, unfamiliar market. What to look for?

Question

Hello BP crew,

I am a young officer in the Air Force and will be stationed in Wichita Falls, TX this upcoming year for training (I will be there ~1.5 years). I am interested in possibly buying my first house while I am there, and renting it out once I leave to go to my first duty station. I am intrigued by this idea because the avg price for single-family homes in this area is not very high, and there is a steady flow of military families looking to rent due to the large military presence.

As I begin to look at the market and build a good understanding of what is out there, what are key indicators I should be looking for? How should I structure my search? What kind of professionals should I initially reach out to? What is a good way to gauge a market?

Thanks!

Tim Lockhart · Answer

@Gabe Salinger  thank you for your service.  I'm a retired AF officer, Realtor and investor in Wichita Falls, and have helped several people in the exact same situation as you.  Wichita Falls has a strong rental market and prices to rent are still very favorable.  Buying homes with VA financing, living in them for a few years and renting when you PCS is a wonderful business plan and I would be very happy to discuss more and help you find a great home when you get here.

Matthew Kwan · Answer

Yes good point by Eliot. Also, you would want a realtor or lender that are also investors themselves where they can provide you the expectations and hurdles of an investor to mentally prep you when you go through the process @Albert Bui @Carlos Valencia

Kyle Mccaw · Answer

@Gabe Salinger this is a great way to build up your rental portfolio. We have a good number of clients that did exactly what you are talking about, EVERY time they moved. When they leave the military they have a great income streams and equity. The VA loan program is your best friend. If you want to supercharge your return rent out your spare bedrooms.

1) In Wichita Falls, I would focus on 3/2/2 brick or partially brick homes. Most of your options will be 50+ yrs old. It would be wise to replace the sewer line before you move away. W.F. has an enormous amount of deteriorated wood frame homes. You don't want the kind of maintenance that comes with those.

2) Lender, talk to @Andrew Postell. He is a lender that has done many VA loans for my friends and clients. He know EVERYTHING about investments properties. He is on BiggerPockets often so he should be easy to find.

3) W.F. is a boring market. Not a lot going on right now. Or in the last 50 years. W.F. has steady employers. It has the regional hospital, Air Force base, Midwestern State University, Jail system, County seat, etc.  But the city has made it a priority to become more attractive to companies looking to relocate. There is a number of small wins with expansions and relocations. However, I suspect they will start landing more larger blue collar companies very soon. They have a low cost of living, large blue collar labor force, and fair highway access.

Eliott Elias · Answer

You need a realtor, property manager, and lender. Everyone except the lender needs to be a specialist in the area and give you a good understanding of what to target as an investor.

Marc Rice · Answer

Consulting with a local investor friendly agent is a great first step. Then running your numbers on a house hack assuming 0% down VA loan no PMI. I always like to shoot for a 1% rule in my market once I move out of the property.

Doug Spence · Answer

@Gabe Salinger Welcome to bigger pockets! I'm an active duty Navy officer and I've been investing in real estate since 2016, when I bought my first property which I still own and rent out.

One thing to remember is, just because you're being stationed somewhere doesn't mean you should buy a property in that location. Buying a property should be a long-term investment, which means the location is extremely important. Wichita Falls might be a great market to buy in right now, but it maybe it isnt. If you only expect to be there for 1.5 years, then that means you'll be renting it out once you PCS - will the home rent for more than your mortgage payment (plus taxes and insurance)? Will you self manage or hire a property manager? Does Wichita Falls have a diverse economy or is it dependent on the military base for jobs and people?

These are questions you need to answer BEFORE you buy this property.

Remember, you don't have to buy real estate where you live! Its easier in the beginning to do so since you can use your VA loan for a primary residence, but you shouldn't buy somewhere just because the USAF stations you somewhere. Buy a property because it fits your goals, the numbers make sense, and its a good market.

Good luck and let us know what you decide to do!

Ben Firstenberg · Answer

When evaluating a market, I look at the following

- Crime

- Quality of local schools

- Quality of local retail

- Proximity to jobs

- Quality of nearby single family homes (is there pride of ownership, or are homes being neglected?)

These are some of the main criteria that determine where people want to live. Also use your gut feeling! Does the neighborhood seem pleasant, do you feel safe, would you feel comfortable with your wife/kids/family walking around there at night?

As far as professionals, I advise to start with the agent. Find a good investor friendly agent and you're well on your way. They should be able to introduce you to contractors, property managers and lenders.

Hope that helps and thank you for your service!

Joel Allen · Answer

@Gabe Salinger

Lots of great advice on this thread, and I wholeheartedly agree with @Tim Lockhart

You're in the perfect position to use your VA loan, live in the home for the 1.5 years that you'll be in Wichita Falls, and with the home prices in Wichita Falls you may very well still have enough VA loan entitlement remaining to purchase another home with the VA loan once you get to your next duty station.

I used this same strategy (purchase primary residence at each duty station and then convert to a rental when it was time to PCS) during my 13 years in the military, which allowed me to build a small, but very stable, portfolio of rental properties.

Happy to chat if you'd like to talk about the strategy more in-depth.

Jack Krusinski · Answer

Hi Gabe, and thank you for your service! I would recommend reaching out to a qualified real estate agent. They will be game changers in your search, and you can learn from their market knowledge. From there, you want to get connected with a suitable lender. What you should look for all depends on your goals. Are you looking to house hack? Rent by the room? Air BnB later? Rent the property out after you move out? I would suggest the first start by answering these questions and asking about your goal. Then share this with your real estate agent and have them help you set the criteria to meet your goals best.

Conner Olsen · Answer

I'd find a realtor in the area that owns rentals. From them I'd ask for a referral for a PM company. Through the two of them they can give you a good idea of the rental market and which areas to buy and which to avoid.

First house, unfamiliar market. What to look for?

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